Mariner Buys Stake in Loan Portfolio from FDIC

Mariner Holdings LLC said it purchased a portion of a $760 million portfolio of property loans from the Federal Deposit Insurance Corp. as part of the agency's sale of assets seized from failed banks.

A unit of Mariner, an asset manager in Leawood, Kan., paid about $52 million for a 40% stake in the portfolio, the company said last week.

The price is about 31 cents on the dollar including FDIC financing.

The FDIC has completed at least 18 structured asset sales, auctioning stakes in loans with a total face value of $21.2 billion, since May 2008, according to data on its website and purchaser announcements.

The median price paid was about 39 cents per dollar of face value for the portfolios.

The FDIC is offering its private-sector partners 0% financing, management fees and new loans to complete the construction of projects that can be held until the real estate market improves.

David Barr, a spokesman for the FDIC, declined to comment on the Mariner sale.

"It will be a while before the revenue rolls in," Martin Bicknell, the chief executive of Mariner, said in a telephone interview.

The FDIC gave Mariner Real Estate Management LLC about $105 million in financing at 0% interest and a $25 million advance for working capital needs.

Mariner Real Estate is the property investment unit of Mariner, which has $7 billion of assets under management.

Mariner expects the FDIC investment to have an internal rate of return of 18% to 20% annually for seven years, with the company receiving 40% of the proceeds and the FDIC getting the balance after Mariner repays the financing, Bicknell said.

"It's not really a matter of capital risk," he said. "It's a question of what the return will be."

The portfolio consists of 1,100 loans for the acquisition and development of residential and commercial properties, Bicknell said.

About 34% of the loans are in Colorado, 12% are in Nevada and the rest in 22 other states, he said.

About a fifth of the loans are current on their payments.

On a value basis, two-thirds of the loans are for residential projects and one-third are commercial.

Mariner Real Estate said it hired Cohen Financial of Chicago to provide asset management and loan administration services for the portfolio.

Options for nonperforming loans include payment restructurings, the sale of the loans or the foreclosure and sale of the properties, Tim Mazzetti, executive vice president of Cohen Financial, said.

"If something is partially built, we might complete the construction if that gives us a better recovery," he said in a telephone interview.

Other buyers of FDIC loans include Oaktree Capital Management LP, Toll Brothers Inc. and Milestone Merchant Partners LLC, which paid about 40 cents on the dollar for 40% of a $1.7 billion portfolio. The companies announced that deal Aug. 17.